Dear Reader,
This newsletter could have been, and perhaps would in the future, be written by artificial intelligence (you might want to scroll to the end to make sure a human wrote it). This week, Generative AI stole the limelight from critical market moving events such as US Federal Reserve policy and even the bunch of sweeping executive orders that US President Donald Trump signed. A Chinese start-up DeepSeek train-wrecked US supremacy in Generative AI, sending ripples across the boardrooms of the Magnificent Seven and making their stock valuations humble.
Questions, from the inane to the outrageous, surround Generative AI today. In fact, Generative AI has left us with more questions than answers every time and we shouldn’t complain as most breakthrough innovations are met with burgeoning questions and doubts onto their road for acceptance. AI propagandists opine that it would upend how the world works, reasons and is. AI doomsday believers say it will come for all of us, our jobs, and our lives. While both scenarios are on the horizon -- and a horizon is always first a mirage -- much of the journey of Generative AI is likely to follow earlier breakthrough innovations. Think wheels, airplanes to even nuclear bombs.
The first response was to question its practical use. Then came the realisation of the potential and finally the technology is everywhere. In his book Same as Ever, investment writer Morgan Housel states that new technology is always underestimated and is near impossible to foresee what it would lead to. “The path from A to Z can be so complex and end up at such a strange point that it’s nearly impossible to look at today’s tools and extrapolate what they might become,” Housel writes.
But there is always a race to the finish line and that is what the US, China, and everyone else are gearing up to. Recall the moon landing and the race to space that followed. The road to progress is paved with humans bickering about it. DeepSeek’s entry with the promise of a cheap alternative learning model for AI has meant that American AI tsars have been inefficient so far. Beijing may have once again trumped America, but it has a shoddy past of ripping off other people’s proprietary ideas. While OpenAI alleges its own model may have been copied by DeepSeek, it is clear who the market is favouring right now.
All this has upended investors’ estimates on how the AI economics will look like. This FT piece, free to read for Moneycontrol Pro subscribers, explains how Silicon valley has embraced the economic idea that a cheaper alternative increases the demand for the product. But the benefits are not equal among the players in the emerging AI industry. Even as financial returns are being debated, Big Tech is already upping its investments. Considering Trump’s affinity for the new (his support of crypto), Big Tech shouldn’t be wrong in betting the President’s all-out backing for AI supremacy. With AI being the breakthrough invention it is, measuring it with fickle stock prices is all wrong, writes Sundeep Khanna in his column.
Where is India in all the hullabaloo over AI? We have joined the race as IT minister Ashwini Vaishnaw rolled out ambitious plans to announce India’s progress in Generative AI. The government will allow DeepSeek on Indian servers since it is an open-source model while working towards developing a domestic AI model. "We believe that there are at least six major developers who can develop AI models in the six to eight months on the outer limit, and four to six months on a more optimistic estimate," the minister said. In addition, the government will invest $4 billion to acquire critical minerals assets overseas to power up domestic electronics, telecommunications, and processing centres.
But will India be able to kick down the door of global AI or will it just wedge it a little open to get a foothold? Our investments into research and development, a pittance, do not give the confidence of a strong entry, a point we made here. That said, the talent pool and the technology sector’s fortitude do offer enough succour.
When AI comes for different jobs, making large swathes of population unemployed, India should not be on the wrong side. Both human and financial capital need to get a reasonable return for a nation’s economic progress. Tomorrow’s Union Budget hopefully would touch upon AI’s progress and what is in store. So that, when AI comes for the job of writing this newsletter, we have a far more productive alternative to do.
We will leave you with an outrageous question on AI. AI is already doing math, painting, music and even investment decisions for people. Will it eventually frame monetary policy or work up a national Budget? Here's what DeepSeek wants from the Budget tomorrow.
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Aparna Iyer
Moneycontrol Pro
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